AT&T Announces Third Quarter Operational Profits Of 54 Cents Per Share, Pro Forma Revenues Increase 5.6 Percent - Company Financial Information

Cambridge Telcom Report, Nov 1, 1999

AT&T Monday announced that third quarter operational profits for the AT&T common stock group were 54 cents per share on a diluted basis, or $1.754 billion, including the operational impact of its acquisitions of TCI and portions of the IBM Global Network business. AT&T's third quarter operational earnings per share declined from 68 cents, or $1.836 billion, earned in the third quarter of 1998 due primarily to the impact of its merger with TCI.

AT&T's total pro forma revenues for the quarter were $16.306 billion, an increase of 5.6 percent compared to the $15.440 billion for the third quarter of 1998, including AT&T Broadband and Internet Services (AB&IS), formerly TCI, and AT&T Global Network Services (AGNS), formerly the IBM Global Network.

Marking the seventh consecutive quarter of revenue growth, AT&T's third quarter revenues increased $719 million, or 5.3 percent, compared to the third quarter of 1998, excluding the impact of AB&IS and AGNS. AT&T's operational earnings per diluted share, excluding the impact of AB&IS and AGNS, were 81 cents, compared to 68 cents for the comparable 1998 quarter, an increase of 19.1 percent.

AT&T's third quarter reported earnings from continuing operations were 50 cents per share on a diluted basis, or $1.633 billion, compared to 78 cents per share, or $2.123 billion, for the third quarter of 1998. Reported results for the third quarter of 1999 include a gain from the sale of a business and reported results for the third quarter of 1998 include a net benefit from restructuring and other charges. AT&T's total revenues, on a reported basis in the third quarter, increased 19.2 percent to $16.270 billion, compared to the $13.653 billion reported for the same period in 1998.

"Today's results are all about delivering on our commitments to investors by growing top-line revenues, meeting earnings targets and reducing our costs," said AT&T Chairman C. Michael Armstrong. "Our strong third quarter performance also reflects the benefits of our investments in growth areas such as wireless and outsourcing services, where revenues were up by more than 40 percent each."

Monday's earnings announcement refers only to AT&T common stock group and does not include the financial results of Liberty Media Group, which reports its results separately. A detailed explanation of AT&T's third quarter business unit performance can be found on the Internet at http://www.att.com/ir/.> Third Quarter Continuing Operations Highlights -- AT&T Business Services reported third quarter revenues of $6.276 billion, an increase of 5.0 percent, compared to $5.975 billion in revenues for the third quarter of 1998. The company's Consumer Services had $5.614 billion in revenues for the third quarter, a decline of 4.7 percent, compared to $5.889 billion for the year-ago quarter. Wireless Services grew third quarter revenues 44.2 percent on a reported basis. Adjusted to exclude the purchase of Vanguard Cellular in the second quarter of 1998 and the third quarter of 1998 sale of the messaging business, wireless revenues increased 40.9 percent from the year-ago quarter, the third consecutive quarter of 40 percent or higher growth. On a pro forma basis, AB&IS, excluding all closed cable partnerships and Excite@Home, had third quarter revenues of $1.442 billion, an increase of 6.7 percent, compared to $1.351 billion for the year-ago quarter. Revenues of the Other and Corporate units, including AGNS, climbed 141.9 percent in the third quarter to $888 million, compared to $369 million in the third quarter of 1998. AT&T Solutions, which is reflected in Other and Corporate results, including AGNS, reported third quarter revenues of $983 million versus $285 million for the year-ago quarter.

-- AT&T's business units delivered strong performances in operational EBITDA. $2.257 billion for the third quarter of 1999, an increase of 13.8 percent from the $1.983 billion reported for the same period last year. Consumer Services reported an increase in third quarter 1999 operational EBITDA of 22.9 percent to $2.393 billion, compared to $1.948 billion for the comparable 1998 period. Wireless Services reported operational EBITDA, excluding other income, of $404 million for the third quarter of 1999, an increase of 53.3 percent, compared to the $264 million reported for the same period last year. AB&IS pro forma operational EBITDA, excluding other income and closed transactions, decreased 24.9 percent in the third quarter of 1999 to $389 million, versus $518 million for the third quarter of 1998. Operational EBITDA for Other and Corporate, including AGNS, was a loss of $191 million for the third quarter of 1999, compared to a loss of $55 million for the third quarter of 1998. AT&T Solutions, including AGNS, reported operational EBITDA of $117 million, an increase of 32.3 percent from the $88 million reported in the third quarter of 1998.

-- Operational cash earnings per diluted share, including AB&IS and AGNS, were 62 cents in the third quarter of 1999. This excludes the amortization of franchise costs, goodwill associated with acquisitions and equity investments, and other purchased intangibles.